“Now is the era that higher levels of business ethics are required from global corporations.”

Corruption and other scandals can put companies into a huge crisis. Multinational companies operating around the world may lose their hard-earned reputation in a moment.

In the case of USA, foreign companies, listed on the US stock exchange can be punished for their corrupt practices according to the Foreign Corrupt Practices Act (FCPA). Companies have to comply with not only domestic but also foreign laws.

Mr. Iohann LE FRAPPER, Vice-Chairman of the ICC Commission on Corporate Responsibility and Anti-Corruption, said on Mar. 3, 2017, “Anti-corruption laws: their enforcement actions against corrupt practices are getting stronger. Companies have to implement higher levels of compliance and business ethics.”

He added, “Especially, there has been an increase in the number of enforcement cases, not only for US companies but also against European and Asian companies by the US authorities during the last 5 years. Global companies are learning the hard way to realize the truth that the era has changed.”

Having worked as a lawyer for many years, Mr. LE FRAPPER is an expert in business ethics with a diverse range of experiences as an in-house counsel in Europe, Middle East, Asia, America, and other parts of the world. He is also an accredited auditor for ISO 37001, the first international anti-bribery management system standard. He visited South Korea last month to attend the ‘2017 Fair Play Club Summit and Fair Play Pledge Ceremony’ hosted by the UN Global Compact Network Korea.

He advised that global companies have to apply same anti-corruption standards regardless of developed countries and developing countries. He said, “For example, they should not apply strict standards in US while less demanding standards in China, as regulators or authorities will ask global companies whether they apply the same standards in the other countries.”

ISO 37001 is a global standard enabling certification created by the International Organization for Standardization so that companies can show a high level of business ethics. Mr. LE FRAPPER explained, “By obtaining the ISO 37001 certification, multinational companies can demonstrate to their boards, investors, and investment rating agencies that they have a high level of business ethics. They can enhance investment attraction and positive corporate reputation.

However, corruption and the abuse of powers can not be eradicated completely, no matter hard efforts can be made. If bribery and violation incidents occur, which remedial actions should companies take?

He pointed out that companies should realize that an effective whistle-blowing system is beneficial from a long-term perspective. He said “If companies cover up corrupt practices, they may encounter higher risks several years later, as if a time bomb explodes after a period of time. Also, if employers can’t apply same standards to employees who commit a wrongdoing, companies may lose the trust of the whole organization.”

He said, “Companies have to show that sanctions punishing corruption are implemented, such as firing problematic individuals and the claw-back of bonus. If companies can’t show codes of conducts are actually implemented, employees will no longer support their employers and companies may lose their trust.”

At the level of government regulations, he emphasized that incentives should be provided for corporations as well as deterrent sanctions. He said that “Like a stick and carrot approach, there should be a system of softening sanctions when companies do self reporting about their corrupt practices. US has such system and Brazil has newly enacted a similar law in 2014.”